Shortage of gold, Indian currency hits Nepal

KATHMANDU: Nepal is facing scarcity of gold for the past few months as the local traders have been using the yellow metal instead of Indian currency, which is also scarce in the market, to import goods from India.

According to Tej Ratna Shakya, president of Nepal Gold and Silver Traders Association, Nepalese importers have been using gold to make payments for goods being imported from India for the last three months, leading to shortage of the yellow metal despite recent hike in gold prices.

In the local market here, one tola of gold, equals 11.664 grams, costs 60,400 Nepalese rupees.

Till the end of last financial year, the daily demand for gold in the market was 15 kilos, which has increased three-fold after the traders started taking gold to India through illegal channel to make payments against purchase of Indian goods, he said.

Nepal is highly dependent on India for import of foreign goods and it is estimated that three-fourth of Nepalese imports comes from India.

Nowadays, the demand for gold has reached 50 kilos per day, which is too difficult to meet as the Nepal Rastra Bank, the central bank of Nepal, only allows import of 15 kilos of gold daily.

This has adversely affected the business of those making gold ornaments, according to economic observers.

"We have not been able to take orders for making gold ornaments due to the shortage of raw gold in the market," Shakya said.

However, spokesman of the central bank Bhaskar Gyawali claims that there is sufficient reserve of Indian currency with the bank.

"Our Indian currency reserve has crossed Rs 60 billion, which is sufficient to pay for those traders who are involved in importing through legal channel," he told Karobar daily.